Opinion & Analysis
OPINION: Pay less, expect more, will it work?
The Government recently announced a new policy on the rate of wages for youth. It will see a drop in the minimum wage for 16 to 18-year-olds. (Currently the adult minimum is $13.50 per hour. The proposal is for an hourly rate of 80 per cent of that or $10.80.) This new minimum will be effective April 1, 2013.
Newspaper reports have run many comments about how unfair this will be and also many comments about how desperate times are for youth unemployment, and that this is a radical but appropriate step to take to reduce youth unemployment.
The argument against runs along the lines that if people do the same work, then they should be paid the same rate of pay. This means that if someone 17 years old does the same work as a 25-year-old, then they should be paid the same. On the surface this seems a sound argument and was one that was accepted previously when youth rates were abolished by the former Labour government.
What the argument doesn't take into account is that things are not actually equal and you are not comparing apples with apples.
Those on the proposed youth rates will often be people who will have had no experience and for whom the job will be their first, or one that they will bring little, if any, workforce experience to.
In a person's first job it is not just about doing the work.
It is also about learning what happens in a workplace, how to interact with fellow workmates, how to get to work on time and what to do when a boss tells you to do something.
It is not simply about shifting one widget from point A to point B.
A worker becomes useful when they know what to do in a workplace and people often don't know what to do until they have some experience of work, or even more generally they have some life skills.
The proposed starting out wage was a strategy announced by National in 2011, so it shouldn't come as a surprise.
The ministry responsible for advising the government, the Ministry of Business, Innovation and Employment, estimates that the policy will help create only 2000 jobs nationwide, but a start is a start.
Business NZ, the employers lobby group, estimates that with all of the additional subsidies available to youth workers, which remain unaffected, a youth on the starting out wage will still be earning more than they would on a benefit.
Business NZ chief executive Phil O'Reilly said in the ODT the other day that, "getting more young people into jobs - especially including those currently on a benefit - will help the economy and communities all through New Zealand".
As was to be expected, the Greens, who were great proponents of removing youth rates, were scathing of the move, saying it was just another way of giving employers cheap labour and that it was discriminatory.
Whilst it may be discriminatory, it is so in a positive way - it is an encouragement to employers to give young people a chance.
What the young people need is the chance to show what they are worth. They need the chance to show employers that it is worth it for employers to spend some time and effort in training the young, not just for the job that they do, but also for a working life.
It is those first few months and years that will determine how a person progresses through their working career.
If they don't get the opportunity they can go through a long period of their life not knowing what it is like to work and how rewarding it can be.
Labour said lower wages would drive the youth offshore, but they forgot that research shows more than half of OECD countries have some form of youth wages.
In France the youth rate is 80 per cent of the adult minimum, 60 per cent of the adult minimum in Great Britain and as low as 48 per cent of the adult minimum for a 16-year-old in Australia.
Speaking as someone who was unable to work for seven years due to illness, I see those who would rather see 2000 youth theoretically paid more, but being out of work having absolutely no idea of the true worth of those people having a job.
The question we have to ask ourselves as a society is: Is this a reasonable strategy for increasing the opportunity for youth to get a start on a working life or would we rather see them still on a benefit?
» Brian Richardson is an employment and human resources adviser at Preston Russell Law.
- © Fairfax NZ News